What do we learn from RuneScape?

[StGabe]

I'll throw up the numbers I've been quoting a lot lately:

WoW reportedly generated over $1 billion in revenue this year.

The ENTIRE casual games industry is estimated to generate revenue between $200 and $400 million.

Casual games have a long way to go yet and a lot of people are overestimating their market and underestimating the core market from a $ perspective.

[HaemishM]

The total development buget for all of the casual games that generated that revenue was likely less than or equal to the WoW development budget, and likely costs much less to maintain.

[Venkman]

I'll throw up the numbers I've been quoting a lot lately:

WoW reportedly generated over $1 billion in revenue this year.

The ENTIRE casual games industry is estimated to generate revenue between $200 and $400 million.

Casual games have a long way to go yet and a lot of people are overestimating their market and underestimating the core market from a $ perspective.

Casual games are about $1bn also, but altogether. Still WoW is bigger.

But it's bigger from a lot less players. That's the big diff there. Audience is potential. Current players you can ply effectively, but only Blizzard can.

[WindupAtheist]

200m?  400m?  1b?  Someone post a goddamn source plz.

[Signe]

200m?  400m?  1b?  Someone post a goddamn source plz.

[HaemishM]

200m?  400m?  1b?  Someone post a goddamn source plz.

It'd be just as easy to link you to goatse.cx, since that's as accurate an origination point as any of the data mentioned.

In other words, the source is pulled out of our asses.

[Margalis]

The "potential audience" for FREE things is pretty fucking huge. That means nothing.

Let's compare Napster to Napster.com. Huge audience to miniscule one.

[StGabe]

For high end figures:

http://www.philsteinmeyer.com/116/casualit-conference/

As Phil states, this is on the high end of figures that have been thrown around.  I've seen as low as $200m from other at least as reputable sources.  I would suspect, but can't prove, that more somewhat-less-casual content is making its way into this estimate.  Yes, the market is growing but even if it grows by a factor of 200% in the same time that tradtional gaming grows 50% you'll still see that casual gaming is dwarfed by more traditional gaming.

Audience size matters somewhat, certainly, but it has to be recognized that there are very large differences in spending patterns that will determine just how big of players these markets can be.  Just as you can't discount casual gaming by saying that traditional gaming will still generate a lot more revenue for the foreseeable future you also can't discount traditional gaming just by saying that there are more soccer mom's than gamers.  If those soccer mom's spend all their time playing hearts on Yahoo Games and won't consider getting out their credit cards to buy games then there isn't that much of a market there.  Meanwhile, if their kids are blowing $500-1,000 on consoles and games, that's a huge market.

The total development buget for all of the casual games that generated that revenue was likely less than or equal to the WoW development budget, and likely costs much less to maintain.

As far as operating costs, first of all I think you are underestimating them.  Secondly, you have to realize that the casual market is a very new market.  New markets don't have a lot of competition.  That means that those selling the products can spend a lot less on their product and still compete.  We are already seeing significant increases in budgets for casual games and there's not a lot of reason to think that they won't continue to grow until we have a big-budget, polished market like with more traditional games.  Raph tries to argue against that, but I really haven't seen a good argument from him and mostly it seems to be wishful thinking.

[StGabe]

Ahh, rereading that I see that just under $1 billion is the estimate for worldwide casual gaming as opposed to just the U.S. market.  That may be where we've diverged.

All the same I think it's clear that casual gaming has a long way to go to catch up to traditional gaming if one US company is generating as much revenue as the entire worldwide revenue for the casual gaming industry (and those figures are higher than others I've seen).

[Venkman]

DFC Intelligence Online Gaming Market report from June- $953mil estimated. Up from about $750mil last year.

The "potential audience" for FREE things is pretty fucking huge. That means nothing

Wrong. It means free loaders you turn into potential purchasers. It's not Napster to Napster.com. It's Napters to iTunes. It doesn't matter that most people still just use iTunes to offload their CD collection. The program was so freakin' cheap to create they've made nothing but arks full of cash for the billions of songs purchased in the service.

Closer to home this is the very essence of the changes over the last few years in the casual space. What started with Solitaire (or Tetris, depending on who's talking) has become a revenue model. The conversion from playing for free to buying the game on a PC is only around 1% (though XBLA boasted in March 20%-35%, not surprising because of their closed system/captured audience). But with them delivering millions of downloads a day, at anywhere from $9.99 to $19.99, that's a lot of bling. For the publisher/aggregator.

[StGabe]

Napster to iTunes is different in the sense that people were always spending money on music.  As the standard argument goes for Napster: Napster users actually tended to spend more on music, not less.  That's not so true for free games.  Free games hit an audience that wants to kill time in a cheap way.  If it costs them $20 to buy a casual game that will last them 10 hours (and most casual games right now don't last that long, even though some casual players will play a lot of hours), that's a big differentiator between, say, watching TV.

[Venkman]

But it's not about the individual games any more than it is about the individual TV channel. If you've gotten someone to pay $20 for one casual game, it's easier to get them to do it again. Like those who make donations to non-profits, that's been proven. Further, casual games are not like linear RPGs. You don't just get the AAA-title standard of 10 hours of game play out of it. They can play on and off for years, because they're of the easy-learn/hard-master variety, not the time-sinky type.

I used the Napster/iTunes thing to replace the Napster/Napster.com reference. I agree with you. It's also been shown that in this age of p2p, music purchasing is on the rise. But I also think Napster/iTunes is particularly relevant because it's about the song, not the album. People always spent money on albums to get songs. Now they get just the songs they want. A lot of consumer insight has resulted, with tweaks in media and content delivery as well as how media is distributed at all. There'll always be a place for brick & mortar, but they're already starting to change how they do things because the nature of packaged media experiences is changing.

It's not just about digital distribution, though the rise of broadband certainly makes that relevant. It's that people are more capable of getting exactly what they want specifically, more than ever before, due to the tech. And because of the underground movements that tech has inspired, the established industries have no choice but to adapt.

Casual games are just an offshoot of this. They've always existed, but in the old days it was hard to put them into a box and on a store shelf beside Ultima VI. Things are different now, except that people still want them.

[StGabe]

You don't just get the AAA-title standard of 10 hours of game play out of it.

Sure you do.  I've played demos of hundreds of casual games doing research.  The standard mode is to have about 5-15 hours of "story mode" and then a puzzle mode.  But generally the story mode is far more interesting than the puzzle mode and most of the development effort goes into the story mode.  A small %'age of players may move on to playing the puzzle mode over and over again but I think they will be the exception, not the rule.  The titles I've bought because I like don't tend to exceed this rule, if I play 20 hours before I get bored, that's a lot.

Not every game is a Tetris.

It's that people are more capable of getting exactly what they want specifically, more than ever before, due to the tech.

I agree.  But I think that a lot of proponents of digital distribution and the new era of gaming are far too quick to discound disparities in spending habits.  There's a lot of handwaving go around but little appreciation that soccer mom's are still going to spend a lot less than hardcore gamers and that the hardcore market, while perhaps catering to a smaller overall population is still likely to be the largest market in terms of overall revenue.

[Venkman]

When I said "AAA" standard, I meant what the majority of video games (consoles) shoot for. The casual stuff is different in that there's less adherance to that rule (and for some companies, the 10 hour rule actually exists). 10 hours for $59.99 or 10 hours for $19.99. Different markets of course, and in most cases, different actual people.

And I got bored of Tetris right quick. I'm not the sort that is compatible with games you play until failure.

But I think that a lot of proponents of digital distribution and the new era of gaming are far too quick to discound disparities in spending habits.  There's a lot of handwaving go around but little appreciation that soccer mom's are still going to spend a lot less than hardcore gamers and that the hardcore market, while perhaps catering to a smaller overall population is still likely to be the largest market in terms of overall revenue.

This is the root of why I agreed with Margalis earlier about this potentially being another dot.com boom/bust. But it's also why I emphasize "right now".

Right now it's a heck of a lot cheaper to produce (as in, one developer team producing) dozens of casual games than to throw all their hopes behind one big-budget one. This is because there's no guarantees on either side. Retailers have limited shelf space and consider their planograms in aggregate. Online portals are limited by how many games they can overtly push at any given time, and that whole real-low-conversion rate potential. There's no sure-fire win for anyone.

So it's not either/or. It's just, well, more.